Accounting for Business Decisions –HI5001
The assignment allows students to exhibit their knowledge and understanding of the subject matter of Accounting. The students will use the skills of analyzing, comparing, criticizing, evaluating and justifying their responses in answering the assignment in a report format.
The students need to be well read to answer the questions.
• The students will be working in a group of four (Maximum) or as specified by the concerned lecturer.
• Forming the group is a responsibility of the students, lecturer’s role is to facilitate the group if required.
• Week 5 would be the last date for the students to submit the names of their group members to the concerned lecturer.
• Assignment work load should be shared equally.
• Each Group member to state and list in front of the assignment, as to what part they have completed and accomplished (i.e. Duties and Responsibilities).
• Each part would be thoroughly answered. Maximum word Limit is 2500 words.
• Students to download assessment criterion available in the blackboard and attach it in front of the assessment.
SECTION A: (16 MARKS)
SECTION B: (14 MARKS)
TOTAL: (30% MARKS)
Due Date: Week 10 before 5.00 pm.
Don’t forget to upload onto Safe assign, one copy per group (do not upload more than one copy). Also, one hard copy to be handed to the lecturer before the schedule time as mentioned above.
SECTION A: (16 MARKS)
Use your kills to Analyze, compare, criticize, evaluate and justify the answers in a process to solve the assignment.
Balance Sheet as at 30th June
Current Assets 2012 2011
Cash 40,000 60,000
Account Receivables 650,000 300,000
Allowance for doubtful debts (50,000) (50,000)
Inventory 700,000 290,000
Equipment 1,800,000 1,100,000
Accumulated depreciation (550,000) (100,000)
Capitalized borrowing cost 200,000 ---------
Total Assets 2,790,000 1,600,000
Account payable 670,000 556,000
Tax payable 60,000 44,000
Non- Current Liabilities
Loan 580,000 600,000
Total Liabilities 1,310,000 1,200,000
Net Assets 1,480,000 400,000
Share Capital 1,150,000 250,000
Retained Profit 330,000 150,000
Sales (all on credit) 1000,000 640,000
Net profit after tax 200,000 128,000
EBIT 290,000 197,000
Tax expenses 41,000 32,000
Required : (Each question is 2 marks)
1.a. What is the interest expense for 2012?
b. How much equipment was purchased during the year?
c. What was the depreciation expense for 2012?
d. Were any share issues? If any, calculate the value.
e. How much in dividend was paid during the year 2012?
f. How much cash was received from customers during the year?
g. How much was paid in tax?
2. Referring to the information in the question, provide four examples of accounting policy choices that ANZ may have made in determining profit that may have increased this year’s profit. (2marks)
SECTION B: (14 MARKS)
The general manager of Qantas had two concerns: the company’s worsening cash position ($3000 cash and No bank loan at the end of 2011, No cash and a $7,000 bank loan at the end of 2012) and an inadequate level of net profit. (According to General Manager).
1. The general manager was confused because the company had a $9,000 profit, yet seemed, as noted above, $10,000 worse off in its cash position. Explain briefly how, in general, this difference between profit and cash change can happen. (2marks)
2. The general manager proposed changes in the company’s accounting policies in a few areas in an attempt to show a higher profit. He met the company’s auditors to discuss these ideas. What do you think the auditors should have said? (2marks)
3. For each of the proposed changes below, considered separately and independently, calculate the effect on 2012 net profit and total assets as at 31st December 2012. Assume a company tax rate (Australia) as income tax rate.
a) The general manager suggested recognizing revenue at an earlier point. If this were done, net account receivables would be increased by $12,000 at 31st December 2011 and by $23,000 at 31st December 2012. (2marks)
b) The general manager suggested changing the inventory cost policy to FIFO (which would still produce costs less than net receivable value). Doing this would increase 31st December 2011 inventories by $4,000 and 31st December 2012 inventories by $1,000. (2marks)
c) The general manager suggested that the company not account for deferred income taxes, but rather treat income taxes payable in each year as the income tax expenses. The deferred income tax liability was $2,800 at 31st December 2011 and, without these changes, $2,600 at 31st December 2012. (3marks)
d) The general manager suggested capitalizing more of the company’s product development costs and amortizing additional capitalized amounts over five years, using the straight line method. If this were done, $4,000 of 2011 expenses would be capitalized at 31st December 2011 and $6,000 of 2012 expenses would be capitalized at 31st December 2012. (3marks)
• All answers must be brief and thoroughly explained and not one line answers. Students not to look at the marks allocated of the questions. Marks are for the concerned lecturer to mark accordingly.
• Please keep in mind the Academic Policy of Misconduct (ie Plagiarism and Collusion).
• Late submission of assignment by one day incurs a penalty of 10% each day.
• For students who enroll late, it’s their responsibility to be on the top of their work. All assignment to be submitted as on time or at the discretion of the concerned lecturer.